How does a company transition from a privately-held entity to a publicly-traded corporation? You need to register with the Securities and Exchange Commission. How do you register? A corporation has a few options to register with the Commission, but all of those applications require some form of filing with the Securities and Exchange Commission. The most common form of registration is a Form S-1. Form S-1 is a registration statement that registers individual securities, rather than a class of shares. Form S-1 is a public filing to the Securities and Exchange Commission (SEC) that provides in-depth information regarding a company and its securities. This form must be filed for any security before the individual shares can be traded on a public market.
What Information Must be Disclosed on an S-1 Form?
Form S-1 requires the disclosure of a significant amount of detailed information. The required financial statements must also be audited and certified by an independent accountant. While the example Form S-1 is a mere eight pages long, do not let that fool you – answering the deceptively simple questions will take skill, and depth to satisfy the Division of Corporate Finance
Often, it can take hundreds if not thousands of person-power hours to complete a Form S-1.
A Form S-1 has two parts. Part I, also referred to as the prospectus, is a mandatory disclosure document that includes information used by potential investors. The prospectus is published after the S-1 has been declared effective. Part II includes disclosures such as information regarding the sales of unregistered securities, financial statements, schedules, and exhibits.
Part 1 Requirements for Form S-1 Registration
Specifically, Part I requires information regarding the following:
- Distribution plan
- Planned use for capital proceeds
- The price per share
- Dilution
- A management description
- Executive compensation
- Financial statements
- Details concerning the financial condition of the company
- Ownership of securities by management and owners
- Market risk disclosures
An issuer must ensure due diligence when preparing a Form S-1. The individuals who prepare a Form S-1 on behalf of the issuer can be held legally liable for any omissions or misrepresentations made in the registration statement. In addition, the issuer and each signatory of the Form S-1 can be held civilly liable for material misstatements and omissions.
The SEC’s Review of Form S-1
After the Form S-1 has been filed, the SEC will review it for compliance and provide initial comments to the issuing company. The SEC aims to respond to the filing within thirty (30) days, but the timeline can vary depending on the complexity of the filing, the current market condition, and other factors.
The SEC’s review process can often be lengthy — if the SEC responds with comments, an amendment to the original S-1 must be filed, along with a letter addressing the comments. The review process of the S-1 continues until the SEC is satisfied that all necessary disclosures have been provided, at which time the S-1 will be declared effective. The S-1 must be effective before any securities in the registration can be sold.
Filing a Post-Effective Amendment
The Form S-1 must be amended after it has already been declared effective by the SEC once a new set of audited financials have been, or should have been issued by the company. In the event that material information contained in the form changes, Form S-1/A should be filed in order for the registration to continue to be effective. A post-effective amendment should also be filed if market conditions result in a delay of the offering.
Contact an Experienced New York Business Attorney to Learn More
If you have been wondering “what is an S-1?” and whether you must file one, it’s vital to consult with a knowledgeable business attorney who can best advise you regarding SEC compliance matters. Brinen & Associates is committed to assisting clients with filing S-1s and ensuring they remain compliant with SEC regulations. Call (212) 330-8151 or send us a message to learn how we can assist you.